Planners keep the faith

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: might be 55%.

Tapped out

Investors without a sufficient cash reserve may be tapped out, especially if you’re likely to lose your job. You can’t afford the risk of losing any more than you have already. Cut some of your losses, Hutchinson says, and move the money to safer investments. That doesn’t mean ``sell everything,’’ but sell enough to create the fixed-income allocation that you should have had all along.

Cut your spending, too. “You can’t control the market, so control what you can,” says Charles Stanley of the planning firm Trovena LLC, in La Jolla, California. William Bengen, author of “Conserving Client Portfolios During Retirement,” suggests that retirees reduce the amount they withdraw from their investment portfolios by 5% to 10%. If this turns out to be a long recession, “portfolio returns may be well below normal for several years,” he says. Cutting back is an insurance policy against that possibility.

No havens

One thing investors have learned (or should have learned) from this panic is that there are no safe stocks. Just a few years ago, you wouldn’t have thought twice about owning Freddie Mac, American International Group Inc., Lehman Brothers Holdings Inc., General Electric Co. and Wachovia Corp., Hutchinson says. Now you’d be cooked. “This is the reason for individual investors to be using mutual funds,’’ he says.

Most of the planners are advising their clients to rebalance their portfolios, which effectively means putting money into stocks at current prices. They’re buying slowly, dollar-averaging into the market month by month. For taxable accounts, they’re also harvesting tax losses, to use against the capital gains that some mutual funds will be reporting, based on gains taken earlier this year.

Not all of the planners I heard from are of the asset- allocation persuasion. Ted Feight of Creative Financial Design in Lansing, Michigan, has most of his clients in cash and bonds. Given the recession warnings that were flashing in 2007, “for people to buy and hold in that situation is using caveman knowledge,’’ he says.

Self-discovery

Bengen also is keeping his clients out of equities. Normally, he says, he believes in traditional asset allocation, but “this is one of those rare instances when duck-and-cover is appropriate.’’